please show work on Question 3 2. The following table shows stock prices (May 1, 2017,...

please show work on Question 3

2. The following table shows stock prices (May 1, 2017, closing), EPS 2016 actual, 2017 forecast, 2018 forecast, and 2016 dividend for the three chemical companies.

	Stock Price	EPS, 2016 Actual	EPS, 2017	EPS, 2018	Dividend
DuPont	79.49	2.77	3.84	4.09	1.52
Dow	62.52	3.52	4.07	4.41	1.84
PPG	109.46	5.82	6.26	6.92	1.56

Given the information above, calculate PE for the three definitions of EPS, dividend yield, and dividend payout.

	Price/Actual EPS	Price/2017 EPS	Price/2018 EPS	Dividend Yield	Dividend Payout
DuPont	28.70	20.70	19.44	1.91%	54.87%
Dow	17.76	15.36	14.18	2.94%	52.27%
PPG	18.81	17.49	15.82	1.43%	26.80%


3. The following table shows historical and projected annual earnings growth rates.

	5-Year Historic Earnings Growth Rates	5-Year Projected Earnings Growth Rates
DuPont	-2.43%	8.06%
Dow	17.39%	6.96%
PPG	10.36%	9.54%

Calculate PE to earnings growth rates (PEG), using the information above and calculations from Question 2.

	Current PE / 5-Yr Historic Growth	1-Yr Ahead PE Forecast / 5-Yr Projected Growth	2-Yr-Ahead PE Forecast / 5-Yr Projected Growth
DuPont	-3.32
Dow	0.40
PPG	0.92

Expert Solution


	Current PE / 5-Yr Historic Growth	1-Yr Ahead PE Forecast / 5-Yr Projected Growth	2-Yr-Ahead PE Forecast / 5-Yr Projected Growth
DuPont	-3.32	2.57	2.41
Dow	0.4	2.21	2.04
PPG	0.92	1.83	1.66


	Formula for PEG = PE ratio/Earnings growth rate

jeff jeffy answered 1 year ago

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